EU mid-market update: Trump lands in Israel to mark ceasefire, after he spooked markets with a post threatening 100% tariffs on China; Canada and US bond markets off for holiday.
Notes/observations
– Quiet Monday morning following a very volatile Friday session as markets were shocked by Trump Truth Social post announcing 100% tariffs on China, effective from Nov 1st. Markets fell sharply with crypto getting the brunt of the collapse. However, since then chip stocks turned after Trump said he wanted to help China, reversing earlier tariff threats. Nvidia up ~4% at after closing nearly 5% lower Friday; AMD up 4%; Intel up 3%.
– China response has been typical, telling US should engage them with dialog and to ‘correct its wrongdoing’.
– French President Macron did announce the PM on Friday, once again putting Lecornu back in position. Lecornu now faces an imminent vote of no confidence in the fragmented National Assembly, where Macron lacks a majority. Analysts note the move highlights the lack of direction in French politics. Bond market is unlikely to unwind any risk premium.
– Oracle AI World runs Mon-Thu, Oct 13-16 and doubles as a financing test, given elevated hyperscaler capex, pending 2026-2027 guidance, Microsoft’s Azure constraints into H126, and long-lead chip and grid bottlenecks that make Oracle’s delivery cadence and contract structure decisive. AI investors want evidence of high utilization and take-or-pay coverage, stronger software attach to lift revenue per watt, and faster cluster stand-ups to prove a credible margin glidepath.
– Silver rally seen as short-lived as liquidity normalizes; Goldman says London inventories expected to recover.
– UK 10-year gilt yield trades around 4.67% ahead of labor and GDP reports.
– LVMH and Volkswagen set to provide their Q3 updates later today.
– US BLS to publish Sept CPI report on Fri, Oct 24th at 8:30ET.
– Asia closed lower with Hang Seng underperforming -1.5%. EU indices +0.1-0.8%. US futures +1.0-1.9%. Gold +1.5%, DXY +0.1%; Commodity: Brent +1.6%, WTI +1.8%; Crypto: BTC +3.0%, ETH +8.4%.
Asia
– China Sept Trade Balance: $90.5B v $98.2Be.
– China Sept Trade Balance (CNY-denominated): 645.5B v 730.0B prior.
– Shanghai Securities News: China seen to boost investment, consumption in Q4.
– South Korea Industry Ministry: To work with US, Chinese authorities to support stable supplies of AI chips and rare earths.
– South Korea FX authority: Closely watching Forex movements; Watching for possibility of ‘herd-like’ behavior.
Americas
– BLS to publish Sept CPI report on Fri, Oct 24th at 8:30ET.
– Pentagon is seeking up to $1.0B of critical minerals for stockpile – FT.
– Magnitude 7.8 earthquake hits the Drake Passage; Tsunami warning issued, waves are possible within 1,000KM along the coast of Chile.
Europe
– Reportedly Chancellor Reeves is looking to increase her fiscal buffer at the upcoming budget; Reeves wants to leave herself with more breathing space than the £9.9B she gave herself against her main fiscal rule at the March spring statement.
– Netherlands government takes control of China-owned chipmaker Nexperia; For the first time, used its Goods Availability Act because of “a threat to the continuity and safeguarding on Dutch and European soil of crucial technological knowledge and capabilities” – FT.
– Germany Fin Min Klingbeil: Seeking €34B in savings by year-end to balance 2027 Federal Budget.
– French PM Lecornu will deliver his general policy speech Monday, Oct 13th’s afternoon, following the first cabinet meeting at 10:00AM local time – press [**Note: today is the deadline for presenting the French state budget for 2026].
– Reportedly German government is discussing exempting interest costs for defense spending from the debt brake – German press.
Global conflict/tensions
– Israeli media: Release of hostages from Gaza expected to begin 08:00am local time (5am GMT) from Netzarim corridor and to continue from 10:00am local time (1pm GMT) in Gaza’s Khan Yunis.
– US Sec Def Hegseth: Dep of War is establishing new counter-narcotics joint task force.
– Ukraine Pres Zelenskiy: Trump has not yet made a decision on supplying Tomahawks to Ukraine; Waiting for Trump’s decision, we are working on it.
– Ukraine Pres Zelenskiy: Discussed air support with Trump.
Trade
– US PRES TRUMP: TO IMPOSE A TARIFF OF 100% ON CHINA; China tariff is starting on Nov 1st; USTR proposes additional 150% tariff on certain cargo equipment.
– US Pres Trump: Don’t worry about China, it will all be fine! Highly respected President Xi just had a bad moment. He doesn’t want Depression for his country, and neither do I. The U.S.A. wants to help China, not hurt it!!! President DJT.
– US President Trump tariff announcement and Nov 1 effective date could suggest room for negotiation – FT.
– China Customs Vice Min: Great efforts are needed to stabilize foreign trade in Q4; in Q1-Q3 China foreign trade has shown resilience with improving structure.
– VP Vance: Calls on China to “choose the path of reason”; It’s going to be a delicate dance, and a lot of it is going to depend on how the Chinese respond.
– China Foreign Ministry Spokesperson Lin: US should engage with China in dialog.
– India Govt Official: India and US trade talks are progressing well; Trade team to visit US this week; Deal expected by fall deadline.
Speakers/fixed income/FX/commodities/erratum
Equities
Indices [Stoxx600 +0.43% at 566.60, FTSE +0.11% at 9,438.06, DAX +0.56% at 24,402.07, CAC-40 +0.64% at 7,968.47, IBEX-35 +0.49% at 15,561.98, FTSE MIB +0.69% at 42,338.00, SMI -0.08% at 12,487.12, S&P 500 Futures +1.4%].
Market focal points/key themes: European indices opened generally higher and remained upbeat through the early part of the session; deescalation of the US-China trade situation has supported risk appetite; Isreal closed for holiday; among sectors leading the way higher are technology and consumer discretionary; telecom and utilities among lagging sectors; PSI Software to be acquired by Warburg Pincus; Serica to acquire certain North Sea assets from BP; US bond markets closed for holiday; earnings expected in the upcoming US session include Fastenal.
Equities
– Financials: Lloyds Banking Group [LLOY.UK] +1.5% (additional Motor Finance provision).
– Healthcare: Astrazeneca [AZN.UK] +0.5%, Sanofi [SAN.FR] +1.0% (Astrazeneca’s agreement with the US on discounted drug pricing), Rovi [ROVI.ES] +2.5% (said to make Novo Nordisk’s drugs from 2026).
– Industrials: Electrolux [ELUXB.SE] +1.0% (LG Electronics prelim results), Rheinmetall [RHM.DE] -1.5% (no Trump’s decision yet on Tomahawk supplies to Ukraine; German government is discussing exempting interest costs for defense spending from the debt brake), Oxford Instruments [OXIG.UK] -13.5% (trading update).
– Technology: ASML [ASML.NL] +3.0% (bounce in tech stocks; US-China trade war escalation; Netherlands government takes control of China-owned chipmaker Nexperia), PSI Software [PSAN.DE] +33.0% (said to be acquired).
Speakers
– ECB’s Vujcic (Croatia): Comfortable with current policy setup.
– South Korea Fin Min Koo: Will stably manage the forex market.
– Former BOJ official Takeuchi said Japan may intervene if USD/JPY rises toward ¥160.
– Poland Central Bank (NBP) Kotecki: Unlikely to continue rate cuts in 2025; Should return to rate cuts in 2026.
Currencies/fixed income
– USD consolidated some of its recent strength with focus continuing on trade tensions. Trump vowed last week to slap 100% tariffs on Chinese imports after Beijing set export controls on rare-earth materials.
– EUR/USD holding above key support of 1.1500 as focus remained on the French political and budget situation. Pair at 1.1585 by mid-session.
– USD/JPY at 152.35 as the Japanese political situation remained in focus after last week’s junior coalition partner walked away. LDP and Komeito parties said to hold meeting on Oct 14th over withdrawal. Japan’s political uncertainty could delay a BOJ rate increase.
– 10-year German Bund yield at 2.64%, France 10-year Oat at 3.48% and 10-year Gilt yield at 4.67% 10-year Treasury yield: 4.02% (closed due to US holiday)
– Spot silver hit a record level with a liquidity squeeze cited as the most recent catalyst.
Economic data
– (TR) Turkey Aug Current Account Balance: $5.5B v $5.5Be.
– (DE) Germany Sept Wholesale Price Index M/M: +0.2% v -0.6% prior; Y/Y: 1.2% v 0.7% prior.
– (RO) Romania Sept CPI M/M: 0.4% v 0.5%e; Y/Y: 9.9% v 10.1%e.
– (SE) Sweden Oct SEB Housing-Price Indicator: 29 v 29 prior.
Fixed income issuance
– (PH) Philippines sells total PHP22.0B vs. PHP22.0B indicated in 3-month, 6-month and 12-month bills.
Looking ahead
– 05:30 (DE) Germany to sell €3.0B in 12-month BuBills.
– 05:30 (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays).
– 06:00 (IL) Israel to sell bonds.
– 06:00 (RO) Romania to sell combined RON800M in 2028 and 2033 bonds.
– 06:30 (IN) India Sept CPI Y/Y: 1.5%e v 2.1% prior.
– 07:05 (UK) BOE’s Greene.
– 07:25 (BR) Brazil Central Bank Weekly Economists Survey.
– 08:00 (UK) Daily Baltic Dry Bulk Index.
– 08:00 (IN) India announces details of upcoming bond sale (held on Fridays).
– 08:00 (ES) Spain Debt Agency (Tesoro) size announcement on upcoming issuance.
– 09:00 (FR) France Debt Agency (AFT) to sell €5.6-8.1B in 3-month, 6-month and 12-month bills.
– 09:00 (RU) Russia Aug Trade Balance: No est v $13.2B prior; Exports: No est v $38.0B prior; Imports: No est v 24.9B prior.
– 09:00 (RU) Russia Q3 Preliminary Current Account Balance: No est v $4.0B prior.
– 12:55 (US) Fed’s Paulson.
– 15:10 (UK) BOE’s Mann.
– 16:00 (US) Weekly Crop Progress Report.
– 17:45 (NZ) New Zealand Sept Total Card Spending M/M: No est v 0.4% prior; Retail Card Spending M/M: No est v 0.7% prior.
– 18:30 (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence Index: No est v 85.1 prior.
– 19:01 (UK) Sept BRC LFL Sales Y/Y: No est v 2.9% prior.
– 19:50 (JP) Japan Sept M3 Money Supply Y/Y: No est v 0.8% prior; M2 Money Supply Y/Y: No est v 1.3% prior.
– 20:00 (SG) Singapore Q3 Advance GDP Q/Q: 0.5%e v 1.4% prior; Y/Y: 1.9%e v 4.4% prior.
– 20:00 (SG) Singapore Central Bank (MAS) Quarterly Monetary Policy Statement.
– 20:01 (IE) Ireland Sept Construction PMI: No est v 45.9 prior.
– 20:30 (AU) RBA Sept Minutes.
– 20:30 (AU) Australia Sept NAB Business Confidence: No est v 4 prior; Business Conditions: No est v 7 prior.
– 20:30 (AU) Australia Central Bank (RBA) Sept Minutes.